FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM
TAX-EXEMPT FUND
ANNUAL REPORT
NOVEMBER 30, 1993
PERFORMANCE UPDATE
$100,000 OVER LIFE OF FUND
$229,982
$190,637
$100,000 OVER LIFE OF FUND: LET'S SAY THAT YOU INVESTED $100,000 IN
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM TAX-EXEMPT FUND (INSTITUTIONAL
CLASS) ON SEPTEMBER 30, 1985, SHORTLY AFTER THE FUND STARTED. BY NOVEMBER
30, 1993, THE VALUE OF YOUR INVESTMENT WOULD HAVE GROWN TO $190,637 - A
90.64% INCREASE ON YOUR INITIAL INVESTMENT. FOR COMPARISON, LOOK AT HOW A
$100,000 INVESTMENT IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX, AN
UNMANAGED INDEX (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT
WOULD HAVE GROWN TO $229,982 - A 129.98% INCREASE.
AVERAGE ANNUAL TOTAL RETURNS
INSTITUTIONAL
LIMITED TERM
TAX-EXEMPT
FUND
LEHMAN
BROTHERS
MUNICIPAL
BOND INDEX
FOR THE PERIOD ENDED NOVEMBER 30, 1993
One-year total return* 8.01% 11.09%
Five-year average annual total return* 7.94% 10.01%
Life of fund average annual total return* 8.13% n/a
FOR THE PERIOD ENDED NOVEMBER 30, 1993
One-year total return* 8.01% 11.09%
Five-year cumulative total return* 46.53% 61.12%
Life of fund cumulative total return* 89.91% n/a
CUMULATIVE TOTAL RETURNS
PERFORMANCE UPDATE - CONTINUED
INSTITUTIONAL
LIMITED TERM
TAX-EXEMPT
FUND
FOR THE PERIOD ENDED NOVEMBER 30, 1993
30-day annualized net yield 4.21%
Tax equivalent yield** 6.10%
One-year dividends per share 53.57(cents)
One-year dividend rate*** 5.13%
YIELD AND DIVIDENDS
* TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS, IF ANY. AVERAGE ANNUAL TOTAL RETURNS FOR MORE
THAN ONE YEAR ASSUME A STEADY COMPOUNDED RATE OF RETURN AND ARE NOT THE
FUND'S YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE PERIODS SHOWN. LIFE
OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS, SEPTEMBER 19, 1985, TO
THE PERIODS LISTED ABOVE. THE LEHMAN BROTHERS MUNICIPAL BOND INDEX IS A
BROAD MEASURE OF THE PERFORMANCE OF THE MUNICIPAL BOND MARKET. IT INCLUDES
REINVESTED DIVIDENDS AND CAPITAL GAINS.
FOR THE PERIOD ENDED NOVEMBER 30, 1993, FIDELITY ADVISOR LIMITED TERM
TAX-EXEMPT FUND (RETAIL CLASS) SHARES' CUMULATIVE TOTAL RETURNS WERE 7.72%,
45.95%, AND 89.17% FOR ONE YEAR, FIVE YEARS, AND LIFE OF FUND,
RESPECTIVELY. FOR THE PERIOD ENDED NOVEMBER 30, 1993, RETAIL CLASS SHARES'
AVERAGE ANNUAL TOTAL RETURNS (WHICH INCLUDE THE EFFECT OF THE RETAIL CLASS'
4.75% SALES CHARGE) WERE 2.61%, 6.81%, AND 7.44% FOR ONE YEAR, FIVE YEARS,
AND LIFE OF FUND, RESPECTIVELY.
IF THE ADVISER HAD NOT REDUCED CERTAIN FUND EXPENSES DURING THE PERIODS
SHOWN, TOTAL RETURNS WOULD HAVE BEEN LOWER.
** THE TAX EQUIVALENT YIELD SHOWS THE YIELD YOU WOULD HAVE EARNED ON A
TAXABLE INVESTMENT TO EQUAL THE FUND'S TAX-FREE
YIELD. IT IS BASED ON A 31% FEDERAL INCOME TAX RATE.
*** THE DIVIDEND RATE REFLECTS ACTUAL DIVIDENDS PAID DURING THE PERIOD. IT
IS BASED ON AN AVERAGE SHARE PRICE OF $10.44.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE, YIELD AND
RETURN WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
MARKET RECAP
Generally, interest rates fell during the year ended November 30, 1993. As
a result, bond prices rose and most fixed-income investors - including
those in tax-free bonds - enjoyed attractive returns. The period began amid
expectations of higher interest rates to come. This was based on signs that
the economic recovery was finally taking hold, as well as uncertainty over
the spending plans of the president-elect. But as President Clinton
promised to tackle the deficit and fight inflation, the bond market
signaled its approval. The yield on the benchmark 30-year Treasury bond
declined steadily and reached a historic low of 5.79% in mid-October. By
the end of the period, as inflation fears returned, the 30-year bond was
yielding 6.30%. Two factors affected tax-free bonds specifically: On the
positive side, higher federal taxes - discussed all year and approved in
August - boosted demand. At the same time, record new issuance kept
supplies high, which somewhat dampened prices. Overall during the period,
tax-free bonds performed well compared to other fixed-income investments.
The Lehman Brothers Municipal Bond Index - a broad measure of the tax-free
bond market - rose 11.09%. By comparison, the Lehman Brothers Aggregate
Bond Index - which tracks investment-grade taxable bonds - rose only
10.89%, due in part to relatively poor performance by mortgage-backed
securities.
AN INTERVIEW WITH
JACK HALEY,
PORTFOLIO MANAGER OF
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM
TAX-EXEMPT FUND
Q. JACK, HOW DID THE FUND PERFORM?
A. Not as well as its peers. The fund's total return for the fiscal year
ended November 30, 1993 was 8.01%. During the same period, the average
intermediate municipal bond fund returned 9.52%, according to Lipper
Analytical Services.
Q. WHY DID THE FUND LAG?
A. For most of the year, the fund's assets were declining. To satisfy
redemptions, I had to keep more cash on hand than I would have liked. That
kept the fund's duration low: around six years, which was shorter than the
group average. Duration measures volatility. Through most of the past year,
when interest rates were falling and bond prices were rising, a longer
duration would have produced higher returns. Then in September, as the
fund's assets began climbing again, I took the opportunity to extend
duration. I continued in that vein - reaching 7.3 years by the end of
November - even as interest rates rose slightly in October and November.
While that hurt the fund in the short term, my goal was to set the stage
for stronger performance in the months to come.
Q. WHILE YOU'VE EXTENDED THE FUND'S DURATION, YOU'VE ALSO SOLD LONG-TERM
BONDS WITH A MATURITY OF 20 YEARS OR MORE. WHY?
A. Bonds that mature in 15-20 years currently offer almost as much yield as
bonds with maturities of 20 years or longer. But if interest rates rise and
bond prices fall, the shorter-term bonds have less downside risk. Given
that, I see little advantage to owning the longer-term bonds. Especially
when I can extend the fund's duration in other ways: by buying non-callable
bonds, which can't be prepaid; and zero-coupon bonds, which pay no interest
until maturity.
Q. YOU'VE BEEN BUYING A LOT OF CALIFORNIA BONDS LATELY. WHY?
A. Conditions in California are looking up. The state was operating within
about 1% of budget through the first quarter of its fiscal year, a big
improvement compared to all the red ink we've seen in recent years. I've
been adding to the fund's stake steadily for the last six months.
California bonds totaled 14.2% of the fund at the end of November, up from
less than 3% a year ago. Earlier in the year, I bought mainly high-quality
issues - insured bonds and AA-rated utility bonds. Recently, though, I've
begun selling the AAA insureds and buying single-A bonds; as economic
conditions improve in California, lower-rated bonds may have more
price-gain potential. So far, I have de-emphasized Southern California,
where I feel the recovery will lag the rest of the state, and focused
instead on state-agency bonds and Northern California local government
issues. I don't expect a rapid turnaround, but I do think now is a good
time to begin building a core position for the future.
Q. YOU'VE ALSO BEEN ADDING TO THE FUND'S STAKE IN EDUCATION BONDS - 16.3%
AT THE END OF NOVEMBER. WHY ARE THEY ATTRACTIVE?
A. Student loan bonds have largely replaced housing bonds over the last
year, as refinancings have made housing bonds progressively less
attractive. Student loan bonds may underperform other bonds in a rally; but
in a flat interest-rate environment - which I'm expecting as we head into
1994 - they can provide the fund with extra income. Some of the AA-rated
student-loan bonds I've bought lately offer three-quarters of a percentage
point more yield than comparable-maturity, AAA-rated general obligation
bonds, or GOs. GOs provide operating revenues for states and municipalities
and are funded by tax dollars. Looking ahead, if President Clinton succeeds
in reforming the way students finance their college education, that may
spell the end of student loan bonds in their present form. If so, we could
see a developing supply/demand imbalance, and ultimately higher prices.
Q. WHAT CAN WE EXPECT GOING FORWARD?
A. By the end of November, the fund was emerging from a difficult period
marked by net redemptions and declining assets. The fund has begun growing
again at an advantageous time, since the outlook for the municipal bond
market is reasonably bright. A further sharp drop in interest rates is
unlikely, but so is a sharp increase. As we enter 1994, I anticipate slow
to moderate economic growth in the first quarter and less worry about
inflation, both of which would be good for bonds. Munis in particular are
likely to benefit from reduced supply and increased demand stimulated by
higher taxes and the backing of high-coupon bonds that will likely be
called on January 1. I'll probably target a neutral to a slightly
aggressive duration - somewhere around seven years - and continue to
emphasize California bonds.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
INVESTMENTS/NOVEMBER 30, 1993
(Showing Percentage of Total Value of Investment in Securities)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL BONDS - 88.1%
ALASKA - 1.2%
North Slope Borough Series B, 0% 1/1/03, (MBIA Insured) $ 1,000,000 $
635,000 662523RR
ARIZONA - 2.1%
Maricopa County Ind. Dev. Auth. Hosp. Facs. Rev. Rfdg. (Samaritan Health
Svcs.) Series B, 6.90% 12/1/99,
(MBIA Insured) 1,000,000 1,120,000 566820GB
CALIFORNIA - 14.2%
California Pub. Wrks. Board Lease Rev.:
Rfdg. (Dept. Corrections State Prisons) Series A, 5% 12/1/01 500,000
504,375 13068GNR
(California Univ. Proj.) Series A, 5.50% 6/1/10 1,000,000 995,000
13068GRE
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Rfdg. 5% 6/1/14, (MBIA Insured)
750,000 697,500 271014GG
Fresno Swr. Rev. Series A-1, 6.25% 9/1/14, (AMBAC Insured) 1,250,000
1,373,437 358229CJ
Los Angeles County Ctfs. of Prtn. (Disney Parking Proj.):
0% 9/1/02 630,000 388,238 5446633M
0% 9/1/04 970,000 525,012 5446633R
0% 9/1/05 1,395,000 704,475 5446633T
0% 9/1/07 1,000,000 456,250 5446633W
Sacramento County Fing. Auth. Lease Rev. Rfdg. Series A, 5.375% 11/1/14,
(AMBAC Insured) 1,000,000 987,500 785846BL
Sacramento Muni. Util. Dist. Elec. Rev. 7.47% 11/15/08, (FGIC Insured)
(a)(d) 1,000,000 1,028,750 7860042C
7,660,537
COLORADO - 4.1%
Adams County Single Family Mtg. Rev. Rfdg. Series A-2, 8.70% 6/1/12, (FSA
Insured) 1,000,000 1,126,250 005706JS
Colorado Univ. Hosp. Auth. Hosp. Rev. Series A, 5.80% 11/15/03, (AMBAC
Insured) 1,000,000 1,077,500 914173AJ
2,203,750
DISTRICT OF COLUMBIA - 1.9%
District of Columbia Gen. Oblig. Rfdg. Series B, 5.10% 6/1/03, (AMBAC
Insured) 1,000,000 1,007,500 254760ZC
FLORIDA - 4.9%
Broward County Arpt. Sys. Rev. Rfdg. Series C, 5.25% 10/1/09, (AMBAC
Insured) 500,000 491,250 114894BL
Florida Tpk. Auth. Tpk. Rev. Rfdg. Series A, 5.25% 7/1/07, (FGIC Insured)
1,000,000 1,005,000 343136EX
Palm Beach County Solid Waste Auth. Rev. Series 1984, 7.75% 7/1/98, (MBIA
Insured) 1,000,000 1,137,500 696560BY
2,633,750
ILLINOIS - 3.8%
Chicago Single Family Mtg. Rev. (Cap. Appreciation) Series A, 0% 12/1/16,
(FGIC Insured) (b) 3,515,000 404,225 167685EF
Illinois Health Facs. Auth. Rev. Rfdg. (Felician Health Care, Inc.) Series
A, 6.85% 1/1/00, (AMBAC Insured) 1,000,000 1,105,000 45201HZC
Illinois Univ. Rev. (Auxiliary Facs. Sys.) 0% 4/1/07, (MBIA Insured)
1,135,000 546,219 914353EU
2,055,444
IOWA - 2.0%
Iowa Student Loan Liquidity Corp. Student Loan Rev. Series A, 6.35% 3/1/01
1,000,000 1,076,250 462590BT
KENTUCKY - 3.3%
Kentucky Higher Ed. Student Loan Corp. Insured Student Loan Rev. Series A,
4.70% 12/1/00 1,000,000 995,000 491303GJ
Owensboro Elec. Lt. & Pwr. Rev. Rfdg. Series B, 0% 7/1/02, (AMBAC
Insured) 1,190,000 779,450 691021HU
1,774,450
LOUISIANA - 2.0%
Louisiana Pub. Facs. Auth. Rev. Student Loan Sr. Series A-1, 6.20% 3/1/01
1,000,000 1,062,500 54640AJY
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL BONDS - CONTINUED
MARYLAND - 3.4%
Maryland Health & Higher Edl. Facs. Auth. Rev. (Sinai Hosp. Baltimore)
5.25% 7/1/19, (AMBAC Insured) $ 500,000 $ 478,125 574216FG
Northeast Waste Disp. Auth. Resources Recovery Rev. Rfdg. (Southwest
Resources Recovery Fac.) 7% 1/1/01,
(MBIA Insured) 500,000 566,875 664252BQ
Prince George's County Rfdg. Consolidated Pub. Impt. Ltd. Tax 5% 10/1/03
750,000 763,125 741701BG
1,808,125
MASSACHUSETTS - 9.3%
Massachusetts Gen. Oblig.:
Rfdg. Ltd. Tax Series B, 5.20% 11/1/04 400,000 409,500 575826AM
(Dedicated Income Tax) Series A, 7.875% 6/1/97 1,000,000 1,081,250
575825VX
Massachusetts Health & Edl. Facs. Auth. Rev. Rfdg. (Boston College)
Series K, 5.125% 6/1/08 1,000,000 973,750 5758512C
Massachusetts Ind. Fin. Agcy. Rev. (Cap. Appreciation) (Massachusetts
Biomedical Research) Series A-1:
0% 8/1/00 (b) 1,100,000 785,125 575914DV
0% 8/1/02 1,600,000 1,010,000 575914DY
New England Ed. Loan Marketing Corp. Massachusetts Student Loan Rev. Rfdg.
Series B, 5.40% 6/1/00 700,000 720,125 643898BG
4,979,750
MULTIPLE STATES - 3.0%
New England Ed. Loan Marketing Corp. Student Loan Rev. Rfdg. Sr. Issue
Series A, 6.50% 9/1/02 1,000,000 1,101,250 643898AT
Washington Metropolitan Area Trans. Auth. Gross Rev. Rfdg. 6% 7/1/08, (FGIC
Insured) 500,000 541,250 938782BE
1,642,500
NEW JERSEY - 5.7%
Hudson County Util. Auth. Util. Sys. Rev. 10% 7/1/11, (Pre-Refunded to
7/1/02 @ 100) (c) 1,000,000 1,370,000 443736AR
New Jersey Health Care Facs. Fing. Auth. Rev. (Shore Mem. Hosp.) Series C,
7.30% 7/1/99, (MBIA Insured) 1,500,000 1,674,375 645793QJ
3,044,375
NEW YORK - 3.2%
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. 5.125% 6/15/04
1,000,000 988,750 649706ZV
New York State Local Govt. Assistance Corp. Rfdg. Series C, 5.50% 4/1/17
745,000 734,756 649876JN
1,723,506
NORTH CAROLINA - 2.1%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg. Series B, 7%
1/1/08 500,000 571,250 658196NW
North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. Rfdg. 6% 1/1/04
500,000 533,750 658203QD
1,105,000
PENNSYLVANIA - 4.1%
Pennsylvania Hsg. Fin. Agcy. Rfdg. (Residential Dev. Section 8) Series A,
7% 7/1/01 1,000,000 1,087,500 708791ZL
Philadelphia Muni. Auth. Rev. (Justice Lease) Series A, 6.80% 11/15/02,
(MBIA Insured) 1,000,000 1,130,000 717904DS
2,217,500
RHODE ISLAND - 2.0%
Rhode Island Student Loan Auth. Student Loan Rev. Rfdg. Series A, 6.55%
12/1/00 (b) 1,000,000 1,066,250 762315AQ
TEXAS - 10.2%
Austin Util. Sys. Rev. Rfdg. Series A, 6% 11/15/06, (MBIA Insured)
1,000,000 1,083,750 052473T6
North East Independent School Dist. Rfdg. Series D, 0% 2/1/00 4,565,000
3,412,338 659154YL
Port Arthur Hsg. Fin. Corp. Single Family Mtg. Rev. Rfdg. 8.70% 3/1/12
895,000 976,669 733500BV
5,472,757
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL BONDS - CONTINUED
VIRGINIA - 2.8%
Portsmouth Pub. Impt. Rfdg. 5% 8/1/02 $ 1,000,000 $ 1,020,000 737237L9
Virginia Trans. Board of Trans. Contract Rev. Rfdg. (U.S. Route 58 Corridor
Prog.) Series A, 5% 5/15/04 500,000 500,625 928184DF
1,520,625
WASHINGTON - 2.8%
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #1 Rev. Rfdg. Series A,
5.10% 7/1/00 1,500,000 1,530,000 939827QL
TOTAL MUNICIPAL BONDS (Cost $45,410,869) 47,339,569
MUNICIPAL NOTES (a) - 11.9%
FLORIDA - 2.8%
Dade County Health Facs. Auth. Hosp. Rev. (Miami Children's Hosp. Proj.)
Series 1990, 2.35%, LOC Barnett Bank, South
Florida, VRDN 1,500,000 1,500,000 233904KQ
INDIANA - 2.2%
Indiana Health Facs. Fing. Auth. Rev. (Cap. Access Designated Pool) Series
1991, 2.20%, LOC Comerica Bank, Detroit,
VRDN 1,200,000 1,200,000 454798CQ
NORTH DAKOTA - 1.9%
Grand Forks Health Care Facs. Rev. (United Hosp. Oblig. Group) Series
1992-B, 1.90%, LOC Fuji Bank, VRDN 1,000,000 1,000,000 385466AS
OHIO - 2.2%
Ohio State Univ. Rev. (Gen. Receipts) Series 1986 B, 2.10%, BPA Fuji Bank,
VRDN 1,200,000 1,200,000 677653QZ
PENNSYLVANIA - 2.8%
Schuylkill County Ind. Dev. Auth. Resources Recovery Rev. (Westwood Energy
Prop.) Series 1985, 2.10%, LOC Fuji Bank,
VRDN 1,500,000 1,500,000 80839TAA
TOTAL MUNICIPAL NOTES (Cost $6,400,000) 6,400,000
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $51,810,869) $ 53,739,569
Futures Contracts
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
20 U.S. Treasury Note Contracts March 1994 $ 2,246,876 $ (6,432)
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.2%
SECURITY TYPE ABBREVIATIONS:
VRDN - Variable Rate Demand Notes
LEGEND:
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $486,500.
(c) Security collateralized by an amount sufficient to pay interest and
principal.
(d) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
OTHER INFORMATION:
The composition of long-term debt holdings as a percentage of total value
of investment in securities for the period ended is as follows (ratings are
unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 88.1% AAA, AA, A 78.3%
Baa 0.0% BBB 0.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 20.4%
Education 16.3
General Obligation 15.5
Lease Revenue 10.6
Electric Revenue 10.3
Others (individually less than 10%) 26.9
TOTAL 100.0%
INCOME TAX INFORMATION:
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $51,810,869. Net unrealized appreciation aggregated
$1,928,700, of which $2,136,321 related to appreciated investment
securities and $207,621 related to depreciated investment securities.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C> <C>
November 30, 1993
ASSETS
Investment in securities, at value (cost $51,810,869) (Note 1) - See accompanying schedule $ 53,739,569
Cash 2,391,579
Interest receivable 736,508
Receivable from investment adviser for expense reductions (Note 5) 6,696
Total assets 56,874,352
LIABILITIES
Payable for investments purchased $ 1,346,305
Payable for fund shares redeemed 472,491
Dividends payable 106,429
Accrued management fee 17,955
Payable for daily variation on futures contracts 5,716
Other payables and accrued expenses 49,254
Total liabilities 1,998,150
NET ASSETS $ 54,876,202
Net Assets consist of:
Paid in capital $ 50,654,567
Accumulated undistributed net realized gain (loss) on investments 2,299,367
Net unrealized appreciation (depreciation) on:
Investment securities 1,928,700
Futures contracts (6,432)
NET ASSETS $ 54,876,202
CALCULATION OF MAXIMUM $10.46
OFFERING PRICE
INSTITUTIONAL CLASS
NET ASSET VALUE, offering price
and redemption price per share
($15,076,139 (divided by) 1,441,700
shares)
RETAIL CLASS $10.46
NET ASSET VALUE, and redemption
price per share ($39,800,063 (divided by)
3,806,354 shares)
Maximum offering price per share (100/95.25 of $10.46) $10.98
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended November 30, 1993
INTEREST INCOME $ 2,124,173
EXPENSES
Management fee (Note 4) $ 156,087
Transfer agent fees (Note 4) 11,310
Institutional Class
Retail Class 20,990
Distribution fees - Retail Class (Note 4) 38,552
Accounting fees and expenses (Note 4) 49,534
Non-interested trustees' compensation 250
Custodian fees and expenses 4,031
Registration fees 23,941
Institutional Class
Retail Class 47,410
Audit 26,416
Legal 13,839
Miscellaneous 256
Total expenses before reductions 392,616
Expense reductions (Note 5) (110,001) 282,615
Net interest income 1,841,558
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 3)
Net realized gain (loss) on:
Investment securities 203,051
Futures contracts 18,592 221,643
Change in net unrealized appreciation (depreciation) on:
Investment securities 458,224
Futures contracts (19,618) 438,606
Net gain (loss) 660,249
Net increase (decrease) in net assets resulting from operations $ 2,501,807
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ 1,841,558 $ 3,843,199
Net interest income
Net realized gain (loss) on investments 221,643 5,234,296
Change in net unrealized appreciation (depreciation) on investments 438,606 (3,763,918)
Net increase (decrease) in net assets resulting from operations 2,501,807 5,313,577
Distributions to shareholders from:
Net interest income
Institutional Class (511,980) (3,832,070)
Retail Class (1,329,578) (11,129)
Net realized gain
Institutional Class (2,190,378) -
Retail Class (143,697) -
Share transactions - net increase (decrease) (Note 6) 26,369,495 (71,584,059)
Total increase (decrease) in net assets 24,695,669 (70,113,681)
NET ASSETS
Beginning of period 30,180,533 100,294,214
End of period $ 54,876,202 $ 30,180,533
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED NOVEMBER 30, 1993
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Limited Term Tax-Exempt Fund (the fund) is a fund of
Fidelity Advisor Series VI (the trust) (formerly Fidelity Oliver Street
Trust) and is authorized to issue an unlimited number of shares. The trust
is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a
Massachusetts business trust.
The fund offers both Institutional Class and Retail Class shares which have
equal rights as to earnings, assets and voting privileges except that each
class bears different distribution and transfer agent expenses and certain
registration fees. Each class has exclusive voting rights with respect to
its distribution plans.
The following summarizes the significant accounting policies of the fund:
ALLOCATED EARNINGS AND EXPENSES. Investment income, expenses (other than
expenses incurred under each class's Distribution and Service Plans,
Transfer Agent Agreements and certain registration fees) and realized and
unrealized gains or losses on investments are allocated to each class of
shares based upon their relative net assets.
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $33,080,602 and $15,902,467, respectively.
The face value of futures contracts opened and closed amounted to
$10,795,068 and $8,541,760, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates ranging from .15% to .37% and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
annual individual fund fee rate is .25%. For the period, the management fee
was equivalent to an annual rate of .42% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, the
Retail Class pays Fidelity Distributors Corporation (FDC), an affiliate of
FMR, a distribution and service fee that is based on an annual rate of .25%
of its average net assets. For the period, the Retail Class paid FDC
$38,552 all of which was paid to securities dealers, banks and other
financial institutions for selling shares of the Retail Class and providing
shareholder support services.
In addition, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $1,134 for the
period.
SALES LOAD. FDC received sales charges for selling shares of the Retail
Class. The sales charge rates ranged from 2.00% to 4.75% based on purchase
amounts of less than $1,000,000. Purchase amounts of $1,000,000 or more are
not charged a sales load. For the period, FDC received $669,395 of which
$571,954 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into sub-contracts with Fidelity Investments
Institutional Operations Company (FIIOC), an affiliate of FMR, and State
Street Bank and Trust Company (SSB) to perform the transfer, dividend
disbursing and shareholder servicing agent functions for the Institutional
Class and Retail Class, respectively. Under revised fee schedules which
became effective January 1, 1993, FIIOC and SSB receive fees based on the
type, size, number of accounts and the number of transactions made by
shareholders. FIIOC, on behalf of SSB, collects fees from the fund and pays
SSB for its services. FIIOC pays for typesetting, printing and mailing of
all shareholder reports, except proxy statements.
The Bank also has a sub-contract with Fidelity Service Co. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses. For the period, FSC received accounting fees
amounting to $45,724.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund for total operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .65% and .90% of average net assets for
the Institutional Class and Retail Class, respectively. For the period, the
reimbursement reduced expenses by $39,011 and $70,990 for the Institutional
Class and Retail Class, respectively.
6. SHARE TRANSACTIONS.
Share transactions for both classes were as follows:
SHARES DOLLARS
YEARS ENDED NOVEMBER 30, YEARS ENDED NOVEMBER 30,
1993 1992 (A) 1993 1992 (A)
INSTITUTIONAL CLASS
Shares sold 1,304,786 1,097,145 $ 13,459,923 $ 11,631,215
Reinvestment of distributions from:
Net interest income 16,630 56,227 172,322 615,318
Net realized gain 29,782 - 301,993 -
Shares redeemed (2,475,469) (7,871,894) (25,708,464) (85,570,333)
Net increase (decrease) (1,124,271) (6,718,522) $ (11,774,226) $
(73,323,800)
RETAIL CLASS
Shares sold 3,977,874 236,060 $ 41,639,361 $ 2,600,609
Reinvestment of distributions from:
Net interest income 42,142 533 441,120 -
Net realized gain 10,264 - 104,073 5,880
Shares redeemed (382,039) (78,480) (4,040,833) (866,748)
Net increase (decrease) 3,648,241 158,113 $ 38,143,721 $ 1,739,741
(a) Share transactions for the Retail Class are for the period September
10, 1992 (commencement of sale of shares) to November 30, 1992.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY
ANY BANK OR INSURED BY THE FDIC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VI (formerly Fidelity Oliver
Street Trust) and the Shareholders of Fidelity Advisor Limited Term
Tax-Exempt Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series VI: Fidelity Advisor Limited Term Tax-Exempt Fund,
including the schedule of portfolio investments, as of November 30, 1993,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the
period then ended (Institutional Class) and for the year ended November 30,
1993 and for the period September 10, 1992 (commencement of sale of Retail
Class shares) to November 30, 1992 (Retail Class). These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series VI: Fidelity Advisor Limited Term Tax-Exempt
Fund as of November 30, 1993, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended (Institutional Class) and for the year ended
November 30, 1993 and for the period September 10, 1992 (commencement of
sale of Retail Class shares) to November 30, 1992 (Retail Class), in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 7, 1994
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Limited Term Tax-Exempt Fund
voted to pay on December 20, 1993, to shareholders of record at the opening
of business on December 17, 1993, a distribution of $.02 and $.02 derived
from capital gains realized from sales of portfolio securities for the
Institutional Class and Retail Class, respectively.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
John F. Haley, Jr., VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND
SHAREHOLDER
SERVICING AGENT
United Missouri Bank, N.A.
Kansas City, MO
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
